tv Bloomberg Daybreak Asia Bloomberg November 6, 2019 6:00pm-8:00pm EST
haidi: very good morning. we are under an hour away from market opens in japan and south korea. shery: good evening from bloomberg headquarters in new york. i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak asia." shery: our top stories this thursday -- deal delayed. bloomberg is told a trade accord may slip to december. low.slumps to a new
we will be asking if the company can find a way back. sophie: and economists say we may be entering a period of peak dovishness. posse shares opening flat after following the most on wednesday. we are keeping an eye on a weak earnings report as well as oil companies with brent extending declines and opec not pushing for deeper supply cuts. the chairman spoke of caution in the short term with capex below 8 million u.s. dollars for 2020 and 2021. checking on the aussie dollar, treading water near a one-week low while aussie bonds are gaining ground on a possible delay to a u.s.-china trade pact being signed.
futures pointing lower after japanese shares ended wednesday flat amid signs of overheating. breaking news crossing the bloomberg on google, google said to be mulling changes to political ad policy, this coming on the back of twitter saying it is voluntarily suspending political adverts on its platform. facebook on the other hand really more embracing it. google now said to be mulling changes to its political ad policy according to dow jones. be mullingid to changes to its internal policy when it comes to political ads. this comes soon after twitter said it would be blocking most political ads. it's just a year out until the u.s. election and these big tech giants are really having to make difficult decisions on accepting political advertising. also under pressure to ban political ads before the u.k. general election as well. let's get to first word news
with jessica summers. jessica: state-owned entities in china are said to be in talks about investing up to $10 billion in the hotly anticipated saudi aramco ipo. the beijing-based silk road fund is among parties that have been in discussions with other mainland funds and soa's potentially joining in. chinese investments in aramco would bolster ties to saudi arabia and allow china to profit from global oil production. maxreturn of the boeing 737 is in further doubt after u.s. regulators rejected an audit on how improved software is being developed. sources say boeing is now revised and decelerated plans to bring the jet back to service. were told the issue came up in a meeting including officials from the faa and the european safety agency. the max has been grounded since march after two fatal crashes. president trump's personal
lawyer says he has hired a legal team to oversee federal scrutiny of his dealings in ukraine. the former new york mayor denies any wrongdoing, saying his work was solely as a defense attorney to defend his client against false charges. he added that the evidence will prove the investigation is a farce and a frame up and will show the president is innocent. thecyprus is revoking citizenship of a fugitive financier. his accused of masterminding the 1mdb scandal which sought more than 4.5 billion dollars allegedly misappropriated from the malaysian investment fund. he denies any wrongdoing. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg.
straight uncertainties back as a potential trump-xi summit is now seen slipping to december at best -- >> trade uncertainties back. let's cross to los angeles and our senior trade editor sarah mcgregor joins us. do we have any idea what happened to those scheduled december tariffs? sarah: it's a really good question. we are hearing from our sources that this plan to summit is being possibly delayed until december, so where does that bring us? that brings us closer to the december 15 deadline with the exposenate is going to -- postpone the deadline on china. it has really not made mention thesens to really cancel december 15 tariffs. they say it depends on if a phase i deal can be reached. this just brings the drama back to the forefront of these trade talks again and raises the stakes for china to get the deal
signed and delivered. >> what about the locations and how politically sensitive it will be where they choose to have the next summit? hetrump himself has said wants to have the signing summit in the u.s. some may raise the question why does it matter. definitely the trump administration want to make sure it is happening between u.s. daylight hours, they have the full american media on their side covering this, but beyond that, it is symbolic. it might indicate an upper hand if the deal is being signed in the u.s. the trump administration can take the lead and say they were the big winners out of this deal. for them, it is quite important. what our sources are telling us, however, is china perhaps does not want that and right now, discussions are moving toward the idea this happen on neutral territory. someplace in europe, perhaps sweden, perhaps switzerland. details are still being worked out.
>> we know from the north korean summit how much the idea of pageantry matters to the u.s. leader. risks?e the does this open up more potential ,or delays, a loss of momentum more issues, either side maybe overplaying their hand? >> absolutely. out,onger this stretches the more opportunities there are for this to fall apart. if they could get this done in a swift, quick manner, it probably would have been ideal for both sides to take the goodwill they had and run with that momentum. but even something as simple as not being able to agree on the location sort of sours the mood, you could say. there's really a lot of optimism right now that a deal could still be reached. but again, the longer it takes, the more chances that even other things could crop up -- foreign policy differences or otherwise
execution in terms of getting to positive cash flow and positive he that. -- positive ebitda. they can show operating leverage and become profitable, and i think they have to show a path now. what are the biggest challenges to win back investor confidence, but also to forge a cohesive strategy and head for the company? >> the biggest thing is the unit economics. we know the unit economics are very good in developed markets like the u.s., but when it comes to food delivery or latin america or some of the asian markets, they are still using a lot of subsidies, and our view is they may actually end up exiting a few of the markets. they did get out of south korea. we think they may end up doing the same in latin america simply because the unit economics will not be viable for the foreseeable future and i don't
think they have enough time going forward to keep subsidizing these markets. haidi: in the meantime, the legal and regulatory battles continue. sort of thing going to continue to haunt not just uber, but i guess the entire space? how did that potentially evolve? >> that is a good point. uber is trying to cut costs. they cut a lot on the sales and marketing side. i think when it comes to the treatment of drivers as employees, they have no choice but to work with regulators city by city and, really, for important cities because uber is theyan urban phenomenon, will have to find a way to please regulators, make sure they are happy and really go city by city. there is no one-size-fits-all here in terms of solving this
problem. shery: how big are the challenges for over eats? >> uber eats kind of operates in a very fragmented market. our view is there are just too many players when it comes to food delivery. food delivery, when you think about it, is not a very attractive business. is aber, what they want synergy between ridesharing and eats, and that is what investors hope they will be able to bundle and come up with a subscription or advertising model. even they are thinking of at a ring -- adding grocery delivery and that could be interesting. haidi: thank you so much for joining us. later, we will be talking about softbank's results. uber weighed big on that. major bets on uber and wework.
let's head to hong kong now. sophie taking a look at one of the early movers and the aussie session. jumped as muchs as 2.8% at the start of cash trade, now easing that gain, though. itsemains on track to meet one billion aussie cost-saving target i the end of fiscal 2020, report card his demonstrates the impact of compensation costs. full-year cash profit fell 11%, and the lender announced another dividend cut which takes total payment for the year down to 1.66 aussie dollars a share. they also announced plans to sell its wealthy unit this year with an ipo possibly in the cards. back to tradeet now. joining us now is ubs asset management head of fixed income. it is an interesting space we find ourselves in.
there is uncertainty still over the trade situation. an interesting reaction when it comes to sovereign bond markets globally and increasing conversation or noise about maybe we will start to see qe in australia. how are we placed at the moment? fundamental flow has stopped getting worse. i think that is the most critical driver of markets, but there has not been any material moves. australia, a lot of chatter, and a lot of analysis, but the reality is i think it is still a long way away for australia. when it comes to the bond market, is duration looking a bit long and the tooth? >> we are consolidating because you need either another cut or some weakening furthering data to drive yields somewhat lower.
difficult it is very to see a material selloff at the same time because of how low cash rates are, how weak inflation is, and of course, very tepid growth. we saw the fed pausing on its midcycle adjustment. here is how the chicago fed president categorized with the fed is doing now. >> i'm not even sure what neutral is anymore. i think it may have moved down on a short-term basis and we need to make an adjustment. i would say moving from leaning toward a restrictive stance as a path to leaning toward an accommodative stance, and that is pretty much what i think we have engineered with our third rate cut at our last meeting. a third rate cut that could be the last in a while. we are seeing bond markets react to that potential. what does it say about perhaps these questions about peak
dovish and is achieved? dovishness having been achieved? >> the key word i heard there was accommodative. personally, peak dovishness -- continuew is they will to ease. the fact that he admits they do not know where neutral is means unchartedavigating waters. shery: does that mean you do not expect something like the 2015 tantrum we saw after the ecb signaled they would not cut rates further? >> correct. this is a scenario playing out in the u.s., and it still suggests the u.s. bond market will outperform over time european bond markets because of the scope that they have to ease at this time. haidi: what implication does a
resolution in the trade do, albeit a light version, even have or has that been priced in and we are weary of it now? the truth is it is not a comprehensive solution but it stops getting worse, and markets are sort of indicating that i think at this time. the fact that the markets have moderate reaction to the fact it might be pushed into december, we are talking about one month. haidi: there's increasing chatter about the need potentially for further unconventional monetary policy and australia. you pretty much shut down the idea of them doing q. week -- qe. shut down the idea of rate cuts, ising that reversal where it making things sentiment-wise worse than better.
>> it's about communication. one of the most powerful tools central banks have is communication, and the things that i hear is that the governor governor will he's further if they have to, interest rates will not be going up for a long time, but the combination of fiscal policy, targeted fiscal policy alongside very accommodative monetary policy is the key next step. also, the aussie dollar come off a fairway. definitely possible. they are exploring, as they should, as a prudent regulator and government should, but i think there's other things that will be done before we get to that. what happened to the regions really against more fiscal support? the german minister said there's no need for additional fiscal
support, and yet you are seeing the limit of monetary policy. >> absolutely. it is painful, though, extracting structural change. we heard talk last night about the banking system in the euro area, but i'm sure fiscal policy will happen in germany. it just could take many months for it to come to fruition. shery: thank you for joining us today. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on your terminal. you can customize your settings so you only get the news on the industries and assets that you care about. this is bloomberg. ♪
shery: let's get a quick check of the latest business flash headlines. xerox is said to be lining up from citigroup. were told xerox is considering a cash and stock offer that sees room for about $2 billion in annual savings from a possible merger. sources also say no final decision has been made and there is no certainty of a firm offer. have all, and citi declined to comment on speculation about a bid. fell for the september period where the decline of 12% from a year ago, but slightly ahead of forecasts. fitbit had agreed to be bought in a deal that will shore up google's consumer hardware business. the two companies expect the $2 billion transaction to close
next year. remainsk's ceo defiant, assuring investors his dealmaking will come good. >> we will make money once the wework's building portfolio is allowed to ripen. how? stop the new building developments and profitability will drastically improve, and we can expect the cost to go down by half or even more. it's that simple. huawei is defining pressure from the u.s. it's founder and ceo expecting smartphone shipments to grow 20% next year. we asked if he has seen an impact at all from washington's
blacklisting of the company. >> yes, indeed, there has been an impact. reached agreements with google, and under the framework agreements, we both work hard to build an ecosystem for the world, and now, because of the supplies being cut, there has apart fromact, but the google-related apps, we still have a lot of features and functions. a lot of consumers still are our firm. accept the impact is bigger than the china region in terms of the smartphone business, so we do
have to slowdown business in the non-china region a little bit, ourwe have mobilized finances. experts, thousands of people in these domains are working harder , and wess these issues with these future resources. we are allocating some of these the holes.o help fix >> your corporate strategy -- strategist told bloomberg yesterday that your smartphone shipments in 2020 will grow 20% and you could get up to 50% of market share domestically in china for smartphones. is this evidence that trump measures against huawei are not working? >> i have not heard of these
data yet. this year's shipment will be around 240 million to 250 million and they expect next .ear there will be big growth however, we don't know about the future situations we might face, so i'm not certain about the situation. >> worst case scenarios, best case scenarios? worst casethe .cenario is what we have now be the worstwill case scenario, and i think things will start to get better and better. later in the hour, we will speak to frost and sullivan vp richard long on the challenges huawei faces outside
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>> the chance of a recession is not significant. >> recession risk is off the table. we may go into a recession. let's turn the ship around. >> we are going to see an uptick in and you factoring. >> put some of the we may go beh manufacturing information and data points behind us. >> that should stop the inventory cycle. >> the market signal -- >> if you look at the same time at the fiscal and monetary backdrop -- >> using both fiscal and monetary policy together -- >> it still will keep markets going. >> that's the narrative i'm focusing on. >> we will still remain in an
economy that does not grow as strong, that is not as strong as we were used to before the global financial crisis. >> some of our guests seeing green shoots and the global economy. is strongment driving -- the index is overbought, but the allure remains. the good times i see continuing. next year economic growth tops expectations and analysts are predicting the taiex companies will post double-digit growth in 2020 and 2021 after falling this year. this after tech firms were hurt on weaker smartphone demand, but so far it looks like everything in taiwan could be a buy. shery: thanks for that. let's get to first word news with jessica summers. jessica: the potential
u.s.-china trade summit is now seen slipping into december at best. washington has expressed optimism about a so-called phase i agreement with beijing said to have been preparing for president xi to travel to america, but bloomberg is told that potential signing sites in iowa and alaska have been dropped. asia and europe are under consideration. defending growth statistics, denying manipulation of the figures after questions about the unusual stability of the data. the prime minister insists the government does not interfere, saying the official body is independent and quite reputable. anaren -- iran says it's ready to inject iranian gas into upwards of 1000 centrifuges,
which will enrich nuclear fuel 4.5 percent. that would be tehran's latest move away from the collapsing 2015 nuclear agreement with world powers. iran says the step is reversible if europe finds a way to sidestep u.s. sanctions and allows it to sell its oil on foreign markets. haidi: thank you. the chicago fed president says no further rate changes are penciled in and his first public comments since the central bank delivered a cut. onrles evans also weighed in where he sees the fed funds rate. >> in the middle of this economic cycle, as we had been taking the funds rate, we thought, to a more neutral setting and maybe just beyond that, we decided i'm not even
sure what neutral is anymore. it may have moved down on a central basis and we need to make an adjustment so the policy would be -- i would say moving from leaning toward a restrictive stance as a path to leaning towards an accommodative stance and that is pretty much what i think we have engineered with our third rate cut at our last meeting. first, the distinction that vice-chairman feature would speak of. please explain that to me when you get a chance. within this is this path of accommodation that we are on right now. we are at a stasis point now. how accommodative is accommodative right now? it's a great question. at some level, monetary policy
can be very detailed, very technocratic, you can look at a lot of data, try out a lot of models, look for a robust response, but at some point, you are always basically searching for -- do i want to be neutral? do i want to sit in the background and let the economy go? let businesses to what they do -- promote capitalism. in the background, and sometimes there's a shortfall of aggregate demand, weakness, and providing more incentives for credit and remediation is helpful or the other way around. you are sort of trying to find we -- are we neutral, are accommodative? i would call the midcycle adjustment one where we were clearly on a path headed towards slightly restrictive. historically, not that
antrictive at that point in economic cycle, but now in my own mind, i was searching for something that was definitely accommodative -- not hugely accommodative, but definitely on the accommodative side of neutral, and i think that rate probably moved down. on a long-run basis, my assessment of neutral is 2.75%, so we were still below that when .e paused we are definitely accommodative, but i'm not entirely sure that the short run neutral funds rate is not a lot closer to two. let's stay on central banks and ask if policymakers are near a point where they have done enough to ward off potential recession with no need for further cuts. evans seemed to support the idea the central bank may be reaching the point of peaked dovish in us
-- peak dovishness. where this idea come from? kathleen: specifically, citibank and others writing about it this week, but i would say jay powell came out in his press conference what he saw in a puzzle ec statement that the fed has done enough -- policy statement that the fed has done enough for now. that was a powerful signal that the fed may be done. this may be all it needs to do, and it could be the end of rate cuts. charlie evans talking today echoed powell saying the economy is in a good place, but he also say we might have to take more steps. i think when you think about , if it will turn
into a trade deal and alleviate that weight. what is your view broadly of where the u.s. economy is heading? if you think the economy is in a good place like the head, sure, this could mean rate cuts, but i think a lot of fed officials are still on guard for the possibility they may have to do more. ecb also seems to be on board with that idea of peak dovishness and they have been saying fiscal stimulus should play a part for the longest time. kathleen: thing about it -- the ecb already has negative rates. they bought so many bonds and their economy is still weak. i think with european central bank, it's pretty clear. everybody says we've done a we can. we have reached peak dovishness. listen. >> monetary policy seems to have reached its end.
going further negative will quite likely not have a positive impact on output or inflation. for this reason, fiscal policy has to take over. drum mariohis is the draghi has been beating for months. christine lagarde is also picking this up. is done.imulus monetary policy has done all it can. economists think the bank of japan reached peak dovishness ages ago. does this help the boj stay where they are? kathleen: when the boj chief gave a speech yesterday, he talked about how monetary policy is giving fiscal stimulus even more energy. let's remember -- with monetary policy, the boj is at a point where it is hurting banks and but forthe economy, them, yes, peak dovishness may have already been reached, but
if you look at other central banks in asia, compare them to the rest of the world. aremany of them, key rates not much higher. they have more room to cut if they need to, but i would bring it back to this -- what does the trade war do daca does it become a trade deal? when that weight gets lifted, it seems a lot of boats around the world will get lifted as well and that may help more central dovishness aseak well. haidi: a lot weighing on these negotiations and this trade deal. we will get more analysis later on. ising up next, qualcomm rising and extended trading after projecting stronger-than-expected revenue. we are breaking down those latest numbers from the chipmaker. this is bloomberg. ♪
is "daybreak asia." shery: qualcomm and baidu surged in late trade after both beat on earnings. su keenan has more on these two companies. qualcomm is projecting strong revenue ahead as well. yeah, a big bet on 5g. the question analysts have had as if they can claim leadership or lead as they claim in 5g leadership, it could lead to strong sales. let's look at how qualcomm is doing after hours. it has been up almost as much as 6%. again, it certainly surprises with that better-than-expected outlook indicating there is a slow pickup and what has been a rather sluggish smartphone isand, particularly where 5g expected. the problem is that a lot of customers have been hanging onto their headsets, and they have to
upgrade on this. qualcomm is somewhat unique, and that most of their revenue comes from licensing. let's take a look at some of their other issues. if we go into the difference in margins, they remain strong versus competitive -- competitors. the ceo on the conference call said 2020 is the year of 5g, so they are really looking to a positive era as we go down the road with 5g. talked about baidu also rallying and extended trading after beating the highest estimates. was a lot of here concern about competition. check out the after hours chart. again, baidu really surging on being able to beat the highest estimates that were out there. again, there has certainly been
a slowdown in revenue, but they were able to beat the estimates that were out there. the issue again is quarterly revenue that comes out after the search engine's proved resilient to both an economic slowdown -- we have about a 30% decline in china's business -- and in the competition which has been significant. third quarter revenue came in at about $4 billion u.s., again, down slightly from a year earlier. doing much better than expected and qualcomm as well. that is after a strong market open, and we have a certain pattern with baidu that does well in the next day after. very interesting to follow. shery: thank you so much for that. let's continue our conversation on baidu because it still faces revenue challenges.
richard wong covers baidu and other big e-commerce companies. great to have you with us. how much was the positive sentiment over baidu something to do with an actual reversal of fundamentals and how much just the fact that they beat estimates, which was already a pretty low bar? >> well, if you looked at previous predictions, a lot of analysts were looking for baidu to come in below expectations, but with recent results, you can see that earnings-per-share is accented6, so that has expectations in terms of analyst expectations. a long -- and that is driven by some of the diversity strategy they have taken on, specifically
in iqe, which is their netflix china. that is used in maintain managed to their revenue. shery: they still have lots of competition. what can we expect going forward as they continue to have these ?hallenges from other rivals >> if you look at growth or the reports that baidu has actually released, they have actually managed to increase their market share. they have grown to 70% of their overall market. with the competition, a competitives player and their entrenched
ships, there is a very high probability where baidu will be shareo maintain market vis-a-vis competition in the market. what we arerms of seeing to revenue growth or the lack of revenue growth, i want to throw up a chart in the bloomberg terminal that illustrates how it has come screeching to a halt. part of this is as we have been talking about the increasing competition. the i guess saturation of the market. how limiting is the fact that this is a company that is very domestically focused compared to some of the other names that have better international prospects? >> definitely compared to some of the bigger or other e-commerce players, baidu's business model is very much central on the economic
performance of china, so the majority of their revenue actually comes from advertising through their search, similar to google, but ultimately, a lot of their revenue stream is coming from the chinese market, and any of the chinesems economy will have a direct impact on his and us spending and have an impact on the ad revenue, but if you compare it to some of the other players like tencent or alibaba where the majority of their business , there's a lots of difference in terms of their ability to achieve what they want to look at in terms of growth. argument to bean made that the backstop should actually drop the b from that background. alibaba seems to have greater dominance.
which of these names are likely to escape more unscathed from as any sort as well of geopolitical concerns that a number of these geopolitical companies in china are facing now? >> i would think alibaba would be the one able to circumvent and come up from the trade war. marketplace,t the and a lot of consumer spending is from china, but the current sentiment and competence in stillof spending is relatively high. what we foresee if you look at the chinese ability to overcome the effect of the trade war, they still still have a huge amf financial, so it is fiscal help alibabable to
entrench and achieve revenue expectations. shery: we have seen now the challenges huawei faces, but it seems to be quite defiant saying they do have a large chinese market. they can actually be self-sufficient. do you agree with that idea? >> huawei is in a very challenging situation right now because of the huge dependency on components from the united states, partnerships with various suppliers around the world. with these barriers and restrictions that the united states government has put in
place, it will definitely be restrained on its ability to time,m, but at the same you can see that huawei is trying to diversify its strategy domesticmore on partnerships, the domestic market itself, getting domestic -- gettingers domestic developers on board. biggers still a disconnect in their ability to reach that level of scale that we see currently today. great to have you with us. if you missed any part of that conversation, tv is your function. you can catch up on past interviews, watch us live, also dive into any of the securities or bloomberg functions we talked about. this is for bloomberg
shery: this is "daybreak asia." i'm shery ahn haidi: in new york. haidi:a quick check of the latest business headlines -- record low. a goldman sachs saw about 2 million shares on behalf of an unknown holder, about a 4% closing to tuesday's price. bloomberg data shows goldman held 4.1% of uber as of june, putting the bank among the top 10 stakeholders. in new yorkny rose on reports it wants lvmh to improve its takeover offer. were told the jeweler considers a $14.5 million bid to be undervalued, but that it could
open its books if more money is on the table. bloomberg is told lvmh is considering the offer and may raise its bid. generale iste boosting a key measure of strength for a second straight quarter and shrinking trade divisions amid a restructuring plan. to one metric of ability absorb losses gained almost 50 basis points after the bank offloaded some assets. socgen has also cut almost $9 billion of risky ventures. markets open in tokyo and at the top of the hour. sophie: s&p has a steady outlook citing steady economic growth. we have about 90 companies reporting and asia today including toyota, which comes
after mitsubishi moody's -- mitsubishi motors became the latest japanese carmaker to be hit by falling to man. olympus is in focus after adr's jump to a record high after delivering a profit beat and announcing a new business plan. forecasts were unchanged. output, it is seen driving revenue and growth for the next fears. softbank shares may come under pressure. after the company posted its first profit loss. current pricing suggests a 5% drop in the last time we saw such a decline was back in early june. haidi: we will have lots more on softbank ahead. the senior research analyst joins us in the next hour of "daybreak asia" to break down those numbers. eums, the cofounder of ether
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after a slump. my judgment in investments was not right so i regret in many ways. >> admitting mistakes. wework andbets of uber could see softbank go bust. online, when it comes .outh korea coming back from japanese stocks under pressure amid signs of overheating. trading steady, below 1.09. the bank does not see big moves to the currency unless china confirms the delay. on negative news could see a push for the yen below 108.
toyota among companies to report today. we will get reaction to the as itof kumo industrial is receiving bids for its stake in an airline. we have the cost be under pressure. the korean won also trading back against the greenback. checking in on the aussie gained.shares have hardy is also among the best performers after raising guidance. let's check in on bonds, checking in on the treasury, we have the 10 year yield around 1.81% after we set a rebound on the trade roadblock overnight. aussie bonds, they are snapping a three day drop. very much in focus after we saw the 10 year yields climb amid a week auction.
pine ridge says yields may rise further as the boj supports that. haidi: let's get more on that trade story now with the first word news. jessica summers. the potential trade summit is slipping into december with two possible signing locations rolled out. washington has expec -- expressed optimism. but bloomberg news told the potential signing site in iowa and alaska have been dropped with asia and europe now under consideration. u.s.ry productivity in the fell in the last quarter for the first time in four years. it suggested a pickup and efficiency was only temporary. nonfarm business employees output decreased in the
september period. int compares for an increase .9% in a bloomberg survey. grosssia is defending its statistics, denying manipulation after questions about the state ability of the data. the finance ministers insist the government does not interfere, saying the official body is independent and reliable. the latest data showed expansion of a fraction over 5% in the third quarter. that is little changed from the previous two periods. global news on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. .> let's turn to sophie softbank is starting to move. sophie: the stock is snapping a four day gain.
this after reviewing heavy losses, attempting to defend dealmaking as the company reported a loss of $6.5 billion. they could not and i do damage, saying the earnings are a mess. deny the damage, saying the earnings are a mess. , more on thatpany softbank story. joining us from tokyo is chris, a research analyst. ray to have you. we don't appear to have chris just yet. we will try to get back to him so we can get his views on softbank which has started trading at the minute. it seems like that market reaction could have been worse. more on that as it becomes
haidi: this is "daybreak asia." shery: our top story, trade uncertainty is back as a potential u.s.-china summit is slipping into december at best with possible signing locations being rolled out in iowa and alaska. let's go to jodi schneider. what is the hold up? >> they had tried to come up with a location and at times -- chile at the international summit. xis is president trump and jinping. now that is canceled because of the protests and they are having
trouble finding a spot to meet. i/o and alaska have been ruled out. they had been hoping to do something in the u.s. when it willertain occur and where. december looks most likely time. they are still figuring out where to go. now may be or asia. the chinese are said to be concerned about having tariffs off the table. the next round of tariffs and a deal before they will go to the u.s. and take that political risk. now it looks like they may not want to go to the u.s. at all to sign what is going to be a limited deal. >> what kind of deal is this now? it sounds like it is limited in terms of what agenda items are on the table. that's right. they are looking at what they
are calling a phase one. that is optimistic, it implies phase two. a limited deal that would require the chinese to buy more products from america, particularly agricultural products and some other products like soybeans in exchange for the u.s. having some relief, giving relief on tariffs to the chinese products, including imposing this next round of tariffs. it does not seem to go beyond that. things like changes to the industrial structure are not on the table at this point. they really want a limited deal. there's been back and forth. even this has been difficult. >> thank you. our senior international editor. let's get another check on that big mover in tokyo. sophie: that is softbank.
a november 1 a low. this is when we learned the extent of the damage from the investment in we work and uber. the first loss in 14 years. despite that performance, he said there will be no change with fundraising on track for . it does raise questions around governance. haidi: let's continue with softbank. chris is a senior research analyst. pickle.quite a can he recover from this and does this say a lot about the success and challenges overall? i do think he will recover from this. in some respects, the saft -- there were many lessons learned as a result of the wework
investment. in the long run, this setback will have been -- i don't think you will register in the share price. it is quite a humbling event for masayoshi son. it was difficult for him to get up on the stage and express his regret. fundamentally, the company is strong. fundamentally the company continues to improve its position. masa pointed out is the value increased over last quarter. that is hard to believe with such massive write-downs, but it is true. it is up 7%. while we are seeing pressure on a share price, the absolute value in the shares has increased.
the is going to be controversy that will play out over the next few weeks as people look at the value and question whether wework was a one-off or if it is symptomatic and something that will plague the company again and again. from my perspective, it was unfortunate. the long term outlook is good. >> it's interesting. you see the reaction in the stock. it looks like he could have been worse. i am wondering if investors were pleased with the fact he came out and that is all he wanted to talk about. he did not avoid the elephant in the room. were infair question indication of investment strategy and approach that is problematic? it is not just wework, but u ber. are they picking companies with questionable governance?
is this something that will haunt masa going forward? i think the issues facing uber and lyft are different to the situation at wework. market is notthe valuing companies that are continuing to burn through cash. the investment premise for uber is not about the business model today. on robory much a bet taxis. the business model today, 80% of revenue goes to paying the driver. that goestaxi, all of back to the company. there's questions about the short-term value of a company like uber. the long term rationale is
sound. the types of investors masa attacks understand that. wework was different. the technology side is less clear. the valuation assumptions were less clear. the scalability of the model was less clear. there were more fundamental issues about this particular investment. certainly about the valuation and the warrant that was priced at 47 billion was a pain point for many investors. nobody could understand how a value like that got set. post all of this, softbank has been able to buy into the company at a low price. while the write-downs have been massive, they own 80% of the company which is the same company they believed in. with marcello in control, with a
restructuring plan, they are confident they can bring wework to positive cash flow in 18 months. i think it is possible they bring this back to the market. >> given all of the challenges there companies are facing, is this premature to be talking about a second fund and a third one? i don't think it is premature. they are in contact with those types of investors that have a that can'tiew and easily access these types of technology unicorns. about takinglking this to the retail market. it would fail today. majorou are talking about wealth funds trying to allocate millions of dollars, they can buy real estate, invest in
companies. what they can't do is evaluate the thousands of tech startups out there with any credible process. whether you believe in the fund or not, they have hired credible technology literate individuals that are assessing the startups to pick winners. it doesn't mean everyone will be a winner. you have to look at the portfolio and on average the portfolio is up. said fromnight inception to now the vision fund has delivered 26%. that is below his target and where he wants to be. it is roughly double what venture fund in general has delivered over that same time. it is not that the vision fund is failing. they have had a setback. i and large they continue to do
what they are doing. i think they will attract the type of pools of money that need help in assessing these investments. the sec public its merger order for sprint and t-mobile. it has been 18 months. if the deal goes through, what will be the implications of softbank? this is a positive catalyst for the stock. in japan softbank bought the failing telco assets of vodafone and turned that around. he tried to do the same thing in the u.s. with sprint and really the job was more difficult. without this merger, most people are skeptical on the outlook for sprint.
sprint has some advantages. one of the best allocations of mid-frequency spectrum in the u.s., essential for 5g. in some respects the outlook is much better than it has been in a 4g world. the company continues to struggle. the merger would give it the scale it needs and the ability to invest and so with doj approval, sec approval, the only outstanding issue is the court case brought by the number of attorneys general. that has to play out. would be positive for softbank. >> chris, thank you for joining us. qualcomm jumped more than 5% in late trade after offering a stronger prediction on rising demand for smartphones.
theporter covers semiconductor industry and joins us from san francisco. what is behind this outlook? is it achievable or fanciful? >> that is a good question. there were various questions and there was some skepticism because this is a company that has struggled for growth for the last five years. now it is saying five years is nearly upon us. trust us, we will delivered. clearly they performed better in the quarter than they had for some time. the tone on the call was, really, are you sure? how is that going to happen? there is lingering skepticism despite a strong performance. outlook,spects of the are the subject of questioning on the call?
>> 5g is something qualcomm has a vested interest in happening as quickly as possible. it has done what it can do which ofto get chips into the hand makers like samsung. that is what it can do. the thing it can't control is the amount of spending by telecom companies on the equipment. it is expensive to roll out a new network. the question remains, why do you buy 5g phones? there is no 5g coverage in your area. qualcomm did provide numbers and said in china at the end of 2020 there's going to be a million 5g stations. that's a lot of coverage. the antitrustding
and licensing issues, is there a sense this company has turned a corner? >> yes and no. in terms of what they are projecting financially and the achievability of that, people would say yes. what concerns people is the fact there is an antitrust case out there against them they are trying to have turned on his heels. there are some things in that it will, if upheld, affect the licensing business, which is the core of their business. huawei is out there, still in dispute. we don't know how that will be affected by the china-u.s. trade war. one day it is going well, it is not going well. ian king, thank you for that. we have breaking news the
bloomberg. to a partnership for investment banking and a brokerage business in south america. they will operate in brazil, argentina, and chile. the venture still needs regulatory approval. this operation would give clients the benefit from ubs's would banking and they gain access to customers and transactional flows and the local fixed income market. plenty more to come. this is bloomberg. ♪
$2 billion from a possible merger. sources say no final decision has been made and there is no certain see of a firm offer. xerox and hp have declined to comment on speculation about a bid. leapt in late trade, revenue almost 7% higher compared with the forecast. andating profit soared, daily active users approached 190 million. , 15 holds, andys no sales. airbnb on the losing side, early results from a poll show a 70% rejection of companies such as airbnb.
the poll is yet to be certified. majorat would be a blow. there is a city was seen as a crucial territory for airbnb. socgen is boosting 80 major for a second straight quarter and shrinking its trading division amid a restructuring plan. it gained almost 50 basis points to 12 point 5% after the bank offloaded some offsets. socgen has almost $9 billion of ventures. coming up next, we are counting down to trade balance numbers out of australia do in a couple of minutes' time. we will have those in the next few minutes. this is bloomberg. ♪
>> >> just crossing the bloomberg, we have that australian trade balance coming in at 7.2 billion dollars. the 5.1 billion expected for the month of september. it is an historically large trade number. expanding from the 5.9 billion earlier. we have been expecting a slip when it comes to imports and slippage when it comes to exports. particularly in the commodities area.
let's look at any kind of market reaction. we have seen the aussie dropped to the bottom of the g10 pile after the u.s. china trade talks are said to be potentially continuing into december. what are we seeing? >> the aussie dollar trading at 6.80. sticking below that 69 handle right there. they are of about .5%. at a mixeding session across the board. the nikkei 225 is flat. we are keeping an eye on what is going on with earnings from japan. an is underyu pressure. when it comes to earnings and focus, let's check in on some of the movers in tokyo. mitsubishi motors is one of the movers there.
this demonstrates the gloomy outlook for japanese carmakers. coal-based is still falling as much as 2.9% after shifting gears. nasa posted a loss from a ¥10 billion profit. olympus jumping as much as 16.2%. the company also announced new targets including boosting the operating margin from 20% -- percent from 11%. citi says a line has been drawn. jeffrey says they may be more but that isaluation a cause for concern. we do hope that meaningful
changes may help softbank regain market favor. before i go, a quick word. boj cut the record -- bot cut the rate to a record low. has gained against the greenback. thank you so much for that. let's keep the focus on thailand. joining us from singapore is our guest. you have been great to have here with us. we have seen the back of thailand cut. rules on also eased the outflows. how much will this help when it comes to the strength on the baht going forward? the measures they
announced yesterday and the rate in does not help too much terms of stemming the appreciation. reason is the surplus, it is very sizable in thailand at the moment. narrow, it does not come from monetary policy. the response has to be fiscal policy. the government has to pick up on capital outlays in particular. we do not expect that to happen. it will still be on the same strengthening path as the thai baht. upset the boost that the sluggish economy would get? >> so far, the data in terms of the impact on what has been announced, it does not show the impact has been great.
this is precisely why we are potential.wth below we need that to pick up. otherwise we will have to get the bot responding some more. we are not ruling out further rate cuts. >> does the efficacy of further -- what kind of structural efforts could be made? >> obviously, as you mentioned earlier, they need to raise investment ratios. i think public infrastructure spending has to be catalyst for that. i think they need to do a lot of structural reform in encouraging more investment, including issues on education and improving labor costs. there is a lot to be done.
i think they have to be done as quickly as possible. there is a greater sense of urgency at the moment. so far we are not seeing that, yet. >> is there any danger of inflation outside? -- upside? inflation is more to the downside. i think that will not change. particularly because the economy remains very weak. i think underlying pressures on core inflation will be the headline. >> what about the philippine economy? we are getting third-quarter gdp numbers soon. >> it is somewhat of the opposite. vs. 5.2cting about 5.9 the previous quarter.
the government has been ramping up their spending after a budget delay earlier in the year. there is quite a bit of fiscal spending and stimulus coming through. as you saw in the past, when these things happen, i think the growth impact is very needed and quite sizable. that will lift a lot of boats if you will as the spending picks up further. >> we saw private investment contracting in the third quarter. how much of a drag will this be? >> i think this will change. ask the government -- as the government makes progress, there is quite a bit of crowding we have seen in the past. months, we recent have seen some of that coming through from the public sector. it is only a matter of time before private investment kicks in as well.
>> this trade deal could be signed by the end of the year. how effective will it be in terms of reviving animal spirits and demand size across southeast asia? >> to the extent of that it removes a lot of the short-term uncertainty that has been exports andth the business sentiment. -- in the nearer term. i think we have to bear in mind, after a phase 1 deal is signed, the issues that are non-trade related are a little more difficult to agree on. we will have to see if that creates another round of escalation and uncertainty. businesses will look on this but
they will probably have to do a wait and see approach. >> thank you so much euban. let's get to new york. jessica has the first word headlines. inject radioy to gas into nuclear centrifuges. that will enrich nuclear fuel to 4.5%. that would be tehran's latest move away from the collapsing nuclear agreement with will power's. iran says the step is reversible as european nations find ways to and so oil onions foreign markets. rudydent trump's lawyer, giuliani says he has hired a legal team to oversee dealings in ukraine. the former new york mayor denies any wrongdoing, saying his work as araine was solely
defense attorney to defend my client against false charges. he added the evidence will improve the investigation -- proved the investigation is a farce and a frame up. cyprus is revoking citizenship of cr jho low. low is accusing of masterminding the scandal that saw more than a billion dollars misappropriated on the investment fund. he denies any wrongdoing. foreigners visiting china will soon be able to use alipay and wechat pay. alipay will let travelers use prepaid cards and tencent's wechat pay will allow visitors to connect their cards to their
you are watching daybreak asia. the back of china is planning to launch a digital version of the yuan. xi jinping called for a greater effort to apply blockchain technologies and gain an edge over major competitors. joining us is joseph. great to have you on with us on daybreak asia. mark zuckerberg says this
-- they said they have to go ahead with this project because otherwise china will do fear?that a legitimate joseph: it is legitimate that china will do it. it is not legitimate that china will dominate the space. mark may have been a little opportunistic. the digital rmb is coming. it may be directly based on blockchain technology or it may use cryptographic primitives or pieces of blockchain technology. it does not need to be a decentralized protocol. aey might choose to have somewhat decentralized protocol before redundancy -- protocol for redundancy or the ability of the system. >> is there a need for stable
cryptocurrency? libra theng like answer to it? joseph: there is a need for stable currencies. bitcoin is used as a digital gold. the ethereum token is a crypto fuel. it is a token that pays for capitation and storage on the ethereum decentralized application network. those tokens rise and fall producing a family -- fall pretty significantly. stablere about 200 price tokens or projects. most of those are operating on ethereum. they just provide price stability. they enable someone on a music platform to pay a dollar using the maker die coin.
they enable people to price blockchain on these platforms in some sort of stable value. they are extremely valuable to our growing, emerging digital economy. >> joe, you often say price does not really matter. it is actually the technology here in the space. if we did not have those speculative run ups in prices, what people really care about his space -- would people really care about the space? joseph: i never said that price doesn't matter. when asked, i said we need lots of people with different interests in our ecosystem. the value of the crypto tokens when they rise, they draw a lot of attention, technologists and
entrepreneurs into the space. that is a very good thing for us. also, higher value of the token brings more value into the protocol. the more value that is in the protocol, the more secure the protocol is. >> what are the next steps for --ereal -- in syria him ethereum? ethereum has been working on two or three major issues. scalability, increasing the number of transactions per second. the second is privatel -- privacy and confidentiality. scalability,to ethereum can handle 25 transactions per second. there are a number of technologies already being used where they are bringing
hundreds, thousands and soon thatmore transactions layer to the platform. some of these technologies are used by games, platforms and other exchanges. they can provide nearly the same level of security but enable much faster transactional userghput and trader experience. the other piece is confidentiality and privacy. there are several breakthroughs that are in use right now. techniques like zero knowledge starts. they will bring confidential transactions. princeton young and aztec are two companies bringing forth that technology very soon. >> i am keen to get your views
on consolidation in the market. just looking at the outperformance of bitcoin about the bloomberg galaxy crypto index. this has been a year of recovery. there are 3000 plus crypto's listed on this website. do you see bigger consolidation? do you see this becoming -- crypto becoming a competitor to -- do you see bitcoin becoming a competitor to gold? >> bitcoin has benefited from 2.0. gold.20. -- gold that is something that speculators and investors can wrap their heads around. that is why bitcoin is attracting most of the new money flowing into the ecosystem. platform for
decentralized applications. the people who are attracted to somethereum platform are speculators. that affects price positively. it is really the technologists, the entrepreneurs, the people who want to build applications on a new kind of trust infrastructure that are being drawn into the ethereum ecosystem. the ethereum ecosystem has grown. indicator isrmance how many technologists and entrepreneurs are in the ecosystem now and how many applications are being built. it is in the thousands. >> really fascinating stuff. thank you so much for joining us. that was joseph lubin. >> coming up next, the fake meat craze could be headed to asia. this is bloomberg. ♪
>> impossible foods has already in theowing rapidly united states. they have a partnership with burger king. they are targeting china as a key market. they made their debut to chinese consumers. showing off their imitation meat products like meatball. they are speaking to regulators and partners in china. take a listen to what they had to say here. >> it has always been the most important country for our mission. today is our debut in mainland, china. to be serving over 50,000 people at our booth here. china as sooner as we possibly can. we are talking to potential partners. we are talking to government officials. we are being very deliberate about it. industry, auild an
industry inmeat china. they would get their plants from chinese farmers. >> you partnered with burger king in the u.s. and also osi group. what partners do you want to work with in china? >> we are still investigating. i will say we want to work with high integrity partners who are committed to our mission and who care as much about food safety, our number one priority and food quality as we do. that is a requirement. we talked to a lot of people who are good potential partners. >> china has been dealing with a massive pork shortage because of the african swine fever. pork is the most popular meat consumed in china. there has been no substitute for it. how do you take advantage? pat: we are working on pork, of
course. we want to make all the meets that chinese consumers care about. -- meats that chinese consumers care about as fast as possible. as a small company, we can't fill the void left by the african swine fever epidemic. it is an opportunity. people are realizing how vulnerable animal-based food production is. it is a real food security issue. we really want to help china solve that. >> how long will it take you to come up with a plant-based pork replacement? >> we already had very good -- have very good prototypes of plant-based pork. it is a matter of commercializing and scaling them. >> china is a massive market for the potential imitation meat
products. for 28% of the global meat consumption. pat brown is looking to take advantage of the macro trends of china insuring its food security the massive decimation of hog populations because of the the massive decimation of hog populations because of the african swine fever. we will have to see where they -- when they make their commercial launch. d porkbe some plant base dumplings will be on the menu. let's get you a preview of what to watch as the rest of the market opens. we are washing galaxy entertainment on the third-quarter numbers that saw an 11% rise. we are also watching reaction to news that sinochem is exploring a plan for a merger according to the chairman of both companies.
also watching after city raised -- a quick health check of what is happening with the town's stocks. they have proved to be one of the better performing ones in the second half. foreign investors are piling in. with a flood of buying, read signals are flashing with the index above 80. is still expected to keep going. up next is the china open. this is bloomberg. ♪
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>> welcome to bloomberg markets china open. i'm tom mackenzie. >> we are coming down to the open of trade in hong kong. here's are your top stories today. bloomberg is told a trade deal may slip to december with signing in the u.s. now ruled out. asia and europe are now under consideration. a robust forecast for chips fornds that demand smartphones may be picking up after a prolonged slump. david: china is interested in the aramco ipo investment.